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Journal of Policy Science Vol.10

The Importance of the Malacca Dilemma in the Belt and Road Initiative

Yu Zhong※

Abstract

In 2013, Chinese President Xi Jinping first proposed the idea of the Belt and Road Initiative,

which aims, at no less than a revolution, changing the world’s economic map. It is also seen by

many as the first shot in a battle between east and west for dominance in Eurasia. In this paper,

we emphasize the importance of the Strait of Malacca in the Belt and Road Initiative, and this

importance was analyzed by neo-liberalism. We take the traditional Malacca Dilemma as an

example of the fact that even the Belt and Road Initiative is an attempt to change China’s energy

strategy. First, the Middle East is involved in the majority of international anti-terrorism, and the

conflicts had broken out what are bad for this type of initiative, meanwhile, this will probably

lead to a decrease in the Middle East’s energy output. In this part, I am trying my best to explain

that China will have to import more energy than before from other parts of the world, which

means it will be impossible for China to get rid of the Strait of Malacca. On the other hand, China

is enhancing its cooperation with ASEAN, which has been proven to have a lot of natural gas

reserves, allowing China to adjust or optimise its energy structure. Due to the reasons given

above, by using of neo-liberalism, this paper focuses on proving that the proposition of the Belt

and Road Initiative makes the Strait of Malacca more and more important.

Key words: Malacca Dilemma, China’s Energy Strategy, ASEAN, the Belt and Road Initiative

※ Master Program, Graduate School of Policy Science, Ritsumeikan University

© The Policy Science Association of Ritsumeikan University:

Journal of Policy Science, 2016. ISSN 1881-6703. vol. 10., pp.85-109

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1. Introduction

Chinese President Xi Jinping first proposed the idea of the Belt and Road Initiative in 2013.

As part of the financing of the plan, in 2014, the Chinese leader also announced the launch of

an Asian International Infrastructure Bank (AIIB),1 providing 47 billion dollars in seed funding

for the project. China is building the world’s greatest economic construction and development

project ever undertaken: the Belt and Road Initiative, which aims at no less than a revolutionary

change in the economic map of the world.2 It is also seen by many as the first shot in a battle

between east and west for dominance in Eurasia. The ambitious vision aims to resurrect the

ancient Silk Road as a modern transit, trade, and economic corridor from Shanghai to Berlin.

The ‘Road’ will traverse China, Mongolia, Russia, Belarus, Poland, and Germany, extending more

than 8,000 miles, creating an economic zone that extends over one third of the circumference of

the earth.

Meanwhile, the other part of the Belt and Road Initiative is the 21st-Century Maritime

Silk Road, which also significant for Chinese and the world’s economic development. Such

an initiative draws inspiration both from history and from the latest developments in the 21st

century. The aim is to inject a strong impetus for enhancing political mutual trust, deepening

economic cooperation, and promoting cultural as well as people-to-people exchanges among

relevant countries through joint cooperation, common development, and regional integration.

All countries along the Maritime Silk Road are welcome to plan, develop, and benefit from the

initiative.3

On the afternoon of November 22, Chinese Prime Minister Li Keqiang visited to the Strait

of Malacca by car after wrapping up his attendance at the series of leaders’ meetings about East

Asian cooperation. This started his official visit to Malaysia.4 The historical channel and the busy

nature of modern shipping indicate that the peaceful and friendly cooperation between China and

Malaysia will certainly continue into the future. On the other hand, it also proves that the Chinese

government attaches importance to Malacca due to concerns about the energy security of China.

2. Theoretical Framework

In this paper, we emphasize the importance of the Strait of Malacca in the Belt and Road

Initiative, and this importance was analyzed by neo-liberalism. Because neoliberals are optimistic

on the international cooperation and they believe that changes in preferences over strategies

usually are sufficient to produce mutual benefit. Much of this change can come by more and

better information-information about the situation, information about what the other side has

done and why it has done it, and information about what the other side is likely to do in the

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future. States can cooperate by reducing transaction costs (the costs and risks associated with

reaching and carrying out agreements) and, in turn, the successful reduction of such costs can

facilitate cooperation.

Then we take the traditional Malacca Dilemma as an example of the fact that even the Belt

and Road Initiative is an attempt to change China’s energy strategy but that it will be hard to

achieve the expected targets. First, the Middle East is involved in the majority of international

anti-terrorism, and the conflicts that have broken out are bad for this type of initiative.

Meanwhile, this will probably lead to a decrease in the Middle East’s energy output. Because

of this, China will have to import more energy than before from other parts of the world, which

means it will be impossible for China to get rid of the importance of the Strait of Malacca. On the

other hand, China is enhancing its cooperation with ASEAN, which has been proven to have a lot

of natural gas reserves, which will allow China to adjust its energy structure. Due to the reasons

given above, this paper focuses on proving that the proposition of the Belt and Road Initiative

makes the Strait of Malacca more and more important.

Keohane and Nye in the book of Power and Interdependence described, “Interdependence is

an objective existence”, Keohane and Nye pointed out that in the world political interdependence

refers to the mutual influence among countries or behavior.5 Interdependence depends on

strong mutual influence and mutual connection. First of all, interdependence does not mean

the consistency of interests. Second, the state of interdependence provides the possibility for

cooperation; however, interdependence does not means it will lead to cooperation. Whether it

is able to reach the cooperation depends on the factors of the game results. Finally, cooperation

should not be viewed as an international state without conflicts, what should be thought as a

response to conflict or potential conflict. Mutual dependence is the source of cooperation, with

the deepening of mutual dependence, the cooperation among countries is easy to achieve, in

other words, it can be said that interdependence provides possibility and opportunities for

cooperation.

The book’s author of After Hegemony, Robert Keohane, and Thomas Crombie Schelling,

an international relations scholars, they take use of the game theory, psychology, sociology and

other disciplines to analyze the phenomenon of international conflicts. The model of prisoners’

dilemma is the most famous for explaining the international cooperation. In prisoners’ dilemma,

two actors are expected to be in the best position, but in the two sides cannot communicate

the premise, to the other side of the cooperation do not cooperate as the best strategy. The

uncertainty of the premise, the behavior of the body may choose to cooperate may also choose to

betray. The model shows that cooperation can be used as one of the options.

Robert Axelord written in his book, The Evolution of Cooperation, by using game theory to

explain the cooperative problem, he used a computer program were repetitive calculations. The

results showed that when the game chain extending, it leads that the behavior of the parties to

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the game converging, what means that in complex game, actors will gradually choose cooperative

strategy.6 The strategy of “TIT FOR TAT” can explain the prisoner's dilemma.7 Then the

conditions of cooperation in the process of the game: 1) actors should have enough opportunities

to interact with each other 2) actors in the interaction can clearly recognize the common interests

that adopt the strategy of mutual benefits 3) to understand and trust each other 4) actors of

betrayal will bear the cost of the corresponding price - the law. Thus it can be said that the game

provides a choice for cooperation.

Keohane believes that the international mechanism has three forms: international

institutions, international intergovernmental organizations, and international conventions.8

International system is one form of the mechanism, it promotes cooperation following several

aspects: 1) International system by improving information supply and violators shall bear legal

liability, reduce transaction cost of behavior body and uncertainty behaviors, such as, the ways

to attract actors to participate in the cooperation 2) International system behavior redefine

the interests of the state and change the behavior of the body preferences. 3) International

institutions to the internalization of externalities, to build a mutually beneficial model. The

international mechanism refers to a series of implicit explicit principles, norms, rules, and

decision-making procedures that are formed by a set of established international relations

that are gathered around the behavior of the actors. Because the difficulties and costs of the

international mechanism, the rational behavior of the body to adjust the existing mechanism as

much as possible.

3. The Outline of The Straits of Malacca from the viewpoint of energy security

3.1 The Strait of Malacca

The Strait of Malacca is a narrow, 805 km (500 mi) stretch of water between the Malay

Peninsula and the Indonesian island of Sumatra. The Strait of Malacca is one of the most

important shipping lanes in the world despite being only 2.8 km wide. This strait is the main

shipping channel between the Indian Ocean and the Pacific Ocean, linking major Asian

economies such as India, China, Japan, and South Korea. Over 60,000 vessels pass through the

strait each year, carrying about one-fourth of the world’s traded goods,9 including oil, Chinese

manufactured products, and products from other countries. About a quarter of all oil carried by

sea passes through the Strait, mainly from Persian Gulf suppliers to Asian markets. In 2007, an

estimated 13.7 million barrels per day were transported through the strait, which increased to

an estimated 15.2 million barrels per day in 2011.10 In addition, it is also one of the world’s most

congested shipping choke points.

However, geopolitically, the Strait of Malacca fall under a number of different territorial and

maritime jurisdictions. Primarily, the Straits are defined as falling between Peninsular Malaysia

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(with a small portion of southern Thailand) and the island of Sumatra with its east and west

limits bordering Singaporean and Indian (the Andaman and Nicobar Island chain) territorial

waters. The International Hydrographic Organization, a non-governmental body in charge of

documenting hydrographic and maritime limitations, has defined the Strait of Malacca as the

following:

• On the west: From the northernmost point of Sumatra (Pedropunt) and Lem Voalan on the

southern extremity of Phuket Island, Thailand;

• On the east: From Tanjong Piai on the Malaysian Peninsula and Klein Karimoen, Indonesia;

• On the north: The southwestern coast of the Malay Peninsula;

• On the south: The northwestern coast of Sumatra to the eastward city of Tanjung Kedabu

to Klein Karimoen, Indonesia.11

3.2. The Situation of Chinese Energy12

The Middle East, as the largest oil-producing region in the world, supplies the demand for

oil all over the world, and now the proportion is more than 40%.13 Meanwhile, the storage capacity

of natural gas in the Middle East is 5,682 million cubic meters, and with the development of the

world’s industry, more and more countries are realizing that natural gas is a cleaner form of

energy. For China, it is the same as the rest of the world, with the importing of oil and natural at

66% and 86%.14

China is now the second largest energy user in the world. It depends on the Malacca Strait

for 85% of its imports,

including 80% of its energy imports.15

Beijing has primarily provided

financial assistance to the littoral countries. In 2012, the Chinese government announced China’s

Energy Policy 2012, which aimed to deepen and reform the country’s energy structure and

transform its developmental pattern, giving prominence to the building of resources that will

lead to an environmentally friendly society.16 In this file, the government introduced clear targets

and briefly analyzed the current situation. On the other hand, the file also showed that China

faces many challenges in terms of energy, such as the fact that the country’s energy-resource

endowment is not high enough and that its per-capita shares of coal, petroleum, and natural gas

are low. It also discussed the Malacca Dilemma, among other issues.

The construction and development of the Maritime Silk Road have an extremely important

strategic significance for the economic and cultural exchange between China and the rest of the

world. Strengthening the oil and gas cooperation between China and ASEAN is an important

part of the construction and development of the Maritime Silk Road. At the termination of the

Maritime Silk Road, in the north of Africa, is another important partner for China. As China

continues to rise, its demand for oil will grow rapidly. In order to ensure its oil security, China has

to acquire oil from the world because its domestic oil resources are not enough to meet its rapid

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economic growth. Whatever path toward growth China takes, its huge oil demand will impact the

world oil market and will influence the existing international oil order and system. As part of its

energy strategy, China’s enterprises have gone to almost every corner of the world to buy oil or

make investments in oil fields where there are opportunities, disregarding the potential for huge

risks in some places. Among the activities of China’s national oil companies, their investments in

some African countries are very outstanding, and apparently, China’s large imports of oil from

Africa have attracted the eyes of the world. Thus, the oil ties between China and Africa, based

mainly on China’s oil purchases and investments, are of increasing interest to many policymakers

and experts.

The economic and political intervention from the United States, Japan, and other developed

countries. The United States and Japan are the major trading partners of the ASEAN countries.

Based on statistics, the trade among the United States, Japan, and ASEAN has exceeded the

level of trade between ASEAN and China. In recent years, with the growth of China’s exports to

ASEAN, a large number of inexpensive consumer goods and mechanical and electrical products

have entered the ASEAN market. China has become a strong competitor with the ASEAN

countries and even with other countries in Europe or with America. The close economic and

trade exchanges offer huge benefits to China, the ASEAN members, and Japan, which has made

the West feel uneasy. In 2002, the ASEAN Trade Advisory Council of the United States asked

the U.S. government to take effective and powerful measures to prevent the establishment of

the China-ASEAN Free Trade Area. In addition, it also urged the United States and ASEAN to

establish a United States-ASEAN free trade area to counter China. At the same time, Japan also

took various measures to interfere with the cooperation between China and ASEAN, hoping

to play a central role in promoting the economic integration of East Asia in the future. The

interference of Japan and the United States in different areas of the China-ASEAN oil and gas

cooperation had a negative impact.

There still contained some disputes over sovereignty in the South China Sea. The South

China Sea sovereignty dispute originated at the end of 1960s and the beginning of the 70s.

The catalyst of this dispute was the discovery of China’s offshore oil and gas resources. The

United Nations formulated a law for the sea, but the terms were imperfect, and the territorial

demarcation principles were vague. The coveted oil and gas resources in the countries

surrounding the South China Sea have the potential to cause many problems. At the beginning

of the 1970s, the Philippines, Vietnam, and other ASEAN countries became involved in rampant

illegal exploitation of oil in China’s territorial waters, a phenomenon that is ongoing. In 1982, to

sign the Department in 1994 and the entry into force of the UN Convention on the law of the sea

also contributed to the phenomenon of the surrounding countries carrying out illegal activities in

the South China Sea Islands and the reefs, because the Convention “owns the island you can have

in a certain sea area resources” provisions. The United Nations’ Convention on the law of the sea

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asked the state party to submit its own exclusive economic zone and continental shelf in May

2009. It said that the Commission will be based on the state’s proposal to deal with the territorial

dispute. After the announcement, the Philippines, Malaysia, and other countries ignored the nine

segment lines within the area due to the fact that the Chinese territory, in the delimitation that

the Commission submitted on the occupation of Chinese territory, was not recognized. China

and the Philippines, Vietnam in twenty-first Century years ago in the South China Sea oil and gas

cooperation, although there is a certain progress, but so far there is no big breakthrough, the

main factors should be the main factor on the sovereignty dispute.

4. Facts and Trends of Chinese Energy Security

In accordance with the situation of China’s energy, some researchers have focused on

elaborating countermeasures to solve the energy security problem. However, if researchers only

identify the questions without searching for the reasons, it will lead us to fall. Many people have

said that the best method to solve the energy security problem is to deepen energy innovation,

heighten energy use efficiency, attend to the international energy stock, and build up a steady

international oil supply. These are the necessary conditions for safeguarding energy security,

according to researchers. Every country should develop ways of transporting oil, strengthening

the ability to control energy transportation, and meanwhile, quickening the oil reser ve

construction; these are some of the important methods that can be used to ensure oil security.

Cooperation among countries by means of conferences, built to enhance military defense and to

protect countries’ overseas interests, is also a necessary measure to ensure the nation’s energy

safety, in which multiply energy structures will be the ultimate solution to energy safety. Finally,

multilateral security cooperation is necessary for the East Asian countries.17

6

China’s territorial waters, a phenomenon that is ongoing. In 1982, to sign the Department in 1994 and the entry into force of the UN Convention on the law of the sea also contributed to the phenomenon of the surrounding countries carrying out illegal activities in the South China Sea Islands and the reefs, because the Convention “owns the island you can have in a certain sea area resources” provisions. The United Nations’ Convention on the law of the sea asked the state party to submit its own exclusive economic zone and continental shelf in May 2009. It said that the Commission will be based on the state’s proposal to deal with the territorial dispute. After the announcement, the Philippines, Malaysia, and other countries ignored the nine segment lines within the area due to the fact that the Chinese territory, in the delimitation that the Commission submitted on the occupation of Chinese territory, was not recognized. China and the Philippines, Vietnam in twenty-first Century years ago in the South China Sea oil and gas cooperation, although there is a certain progress, but so far there is no big breakthrough, the main factors should be the main factor on the sovereignty dispute.

4. Facts and Trends of Chinese Energy Security

In accordance with the situation of China’s energy, some researchers have focused on elaborating countermeasures to solve the energy security problem. However, if researchers only identify the questions without searching for the reasons, it will lead us to fall. Many people have said that the best method to solve the energy security problem is to deepen energy innovation, heighten energy use efficiency, attend to the international energy stock, and build up a steady international oil supply. These are the necessary conditions for safeguarding energy security, according to researchers. Every country should develop ways of transporting oil, strengthening the ability to control energy transportation, and meanwhile, quickening the oil reserve construction; these are some of the important methods that can be used to ensure oil security. Cooperation among countries by means of conferences, built to enhance military defense and to protect countries’ overseas interests, is also a necessary measure to ensure the nation’s energy safety, in which multiply energy structures will be the ultimate solution to energy safety. Finally, multilateral security cooperation is necessary for the East Asian countries.17

17 王朝峰，《论新世纪中国能源安全与对策》，04/2006.

Figure 1: China’s Total Coal Consumption18

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Even if all these measures are put into practice, it will not change the fact that the demand

for energy is plentiful. Let us take coal as an example. In 2011, China used 3.8 billion tons of

coal; this number represents almost half the world’s coal consumption. In accordance with

Coal’s Dominance in China’s Power Generation, coal makes up about two thirds of the fuel

used for power generation in China. According to Chinese estimates, the share of coal in power

generation in 2012 may be as high as 75% to 77%. The volume of coal used in the generation of

power is likely to remain the same in the future; China will account for a great part of the world’s

coal consumption.

However, the consequences and costs of such a production-intensive and coal-reliant

economy are dramatic and stark. Pollutants from coal-fired plants, whether sulfur dioxide (SO2)

or PM 2.5, are choking urban China. Repeated occurrences of “airpocalypse” have become

emblematic of the considerable downsides of a coal- based economy.19 More than a decade into

China’s industrialization, the environmental and potential public health costs are no longer an

abstraction but a grim reality, and these problems are becoming a social problem.

In the past decade, China has increased its energy production and has expanded its

production of renewable and nuclear energy. The National Bureau of Statistics reported that the

use of hydro, wind, solar, and nuclear power increased to 9.5 percent of total energy use in 2008.

Meanwhile, some reports indicate that plans are underway to increase the share of renewable

energy to 15 percent by 2020.20 Hydropower increased from one percent of China’s total energy

consumption in 1949 to 7.4 percent in 2008; in that year, China’s hydropower capacity had

reached 170 million kw, making China the largest hydropower-consuming country in the world.

China’s wind-energy production has doubled every year in the past three years; its current

capacity of 12.21 million kw ranks the fourth in the world.21 In 2008, the solar energy sector

produced about 6,000 tons of polycrystalline silicon and 2 million kw of solar photovoltaic cells,

while the nuclear power sector’s installed capacity was 8.85 million kw.22

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8

Figure 2: China’s Oil Production and Consumption, 1965-2009 (million tons)23

When we read these reports, we gain a very strong impression of China’s energy use and production. However, there still many problems. We will focus on an analysis of China’s oil use. Based on the graph above (China’s Oil Production and Consumption, 1965-2009, (million tons)), we found that the country’s oil consumption in 2009 was more than 400 million tons. Crude oil import from 1990 1997 2005 2006 2008 2010 Middle East 39% 48% 46% 44% 46% 46% Russia/Central Asia n/a n/a 11% 11% 10% 10% Atlantic Basin n/a n/a 23% 5% 3% 3% Asia Pacific 60% 26.2% 8% 4% n/a n/a Africa 0% 16.7% n/a 32% 23% 22% Others 0% 9.6% 12% 4% 18% 19% Total 100% 100% 100% 100% 100% 100%

Table 1: China’s Crude Oil Imports by Origin24 (% share) China’s demand for imported oil has changed in accordance with the global and

regional geopolitical and economic developments over time and in response to geopolitical and transportation risks. Nevertheless, Middle Eastern countries have always acted as the most important suppliers of about half of China’s imported oil. Based on the calculations of the tables, China’s Crude Oil Import by Source (Figure 3) and China’s Crude Oil Imports by Origin (Table 2), it is easy to support this

23 Source:BPStatisticalReviewofWorldEnergy201024 Source:Thedataarecompiledfromdifferentsourcesbytheauthor.China,GeneralAdministrationofCustoms(2005),IEA(2006),IEA(2001),FACTSGlobalEnergy(2008),EIA(2010)Note:AtlanticBasinsource(3%)in2010isfromBrazil

Figure 2: China’s Oil Production and Consumption, 1965-2009 (million tons)23

When we read these reports, we gain a very strong impression of China’s energy use and

production. However, there still many problems. We will focus on an analysis of China’s oil use.

Based on the graph above (China’s Oil Production and Consumption, 1965-2009, (million tons)),

we found that the country’s oil consumption in 2009 was more than 400 million tons.

Table 1: China’s Crude Oil Imports by Origin24 (% share)Crude oil import from 1990 1997 2005 2006 2008 2010

Middle East 39% 48% 46% 44% 46% 46%Russia/Central Asia n/a n/a 11% 11% 10% 10%

Atlantic Basin n/a n/a 23% 5% 3% 3%Asia Pacific 60% 26.2% 8% 4% n/a n/a

Africa 0% 16.7% n/a 32% 23% 22%Others 0% 9.6% 12% 4% 18% 19%Total 100% 100% 100% 100% 100% 100%

China’s demand for impor ted oil has changed in accordance with the global and

regional geopolitical and economic developments over time and in response to geopolitical

and transportation risks. Nevertheless, Middle Eastern countries have always acted as the

most important suppliers of about half of China’s imported oil. Based on the calculations

China’s Crude Oil Imports by Origin (Table 1), it is easy to support this conclusion. China has

been trying to import crude oil from other parts of the world to decrease its dependence on

imports from the volatile Middle East. This includes its investments in African countries such

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as Angola, Sudan, Libya, and the Congo, and in Russian and Central Asian countries such as

Kazakhstan. Investments in these Central Asian countries can also significantly decrease sea-lane

transportation risks. The financial crisis has not changed China’s source of oil imports.

Even China had taken some measures to multiply its oil sources and to decrease its

dependence on oil imports from the Middle East; no one can deny that the Middle East is

the energy center of the world and still produces large proportions of the energy share. This

situation will lasts for a long time, not for only China but for other countries in the world. Oil is an

important energy for industry and even for people’s daily lives. During this period, Middle East

will continue to play an important role in the global community.

Finally, let us pay attention to natural gas, which is thought to take the place of oil, because

its clear. In China, a similar policy is spreading related to the air-pollution of PM 2.5.

Natural gas will be of crucial importance to this narration in the future. There is increasing

market consensus that Chinese natural gas demands will balloon over the next decade, which has

led some to go so far as to proclaim that the era of coal is yielding to a golden age of gas in China.

There are indeed strong reasons for optimism that gas will get a significant boost in China’s

energy mix, not least of which is the strong political support the idea receives.

Natural gas is not carbon-free by any means, but it is cleaner than burning coal and oil. It is,

therefore, viewed as an important factor in reducing air pollution and emissions and as a “bridge

fuel” in China’s transition to cleaner energy.

The potential for natural gas growth is enormous in China since it is today only about 4 to

5 percent of China’s energy mix, which is far lower than the world average of around 20 percent.

By 2015, China anticipates doubling natural gas so that it represents 8% to 9% percent of its

energy mix or between 230-260 bcm of gas consumption in total volume.25 While estimates vary

about the total demand figures, virtually all projections anticipate rapid growth. According to the

BP Energy Outlook, China will contribute 23 percent of the increase in global gas demand and

is expected to reach the European Union’s 2010 gas consumption level by 2030.26 As shown in

the table below, China, while starting from a low base, will have by far the biggest share of gas

demand growth over the next decade.

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Figure 3: Natural Gas Demand in Select Regions in the New Policies Scenario27

Chinese domestic production, however, is unlikely to keep up with this robust demand growth, which has expanded by nearly 20% since 2010. China has imported about one-third every year, and this is a trend that is unlikely to abate in the near term. While it was initially thought that China’s vast domestic reserves of unconventional resources such as shale gas could fill the gap between supply and demand, the role of shale is likely to disappoint in the medium term. Urbanization, the centerpiece of China’s growth strategy through at least 2020, will also support natural gas because urban residential demand has been a major driver of gas consumption (e.g., Chinese households almost exclusively cook with gas stoves). Between 2005 and 2012, residential gas consumption ballooned by 260%, thereby outpacing the consumption growth rate in the industry. This trend is likely to pick up for the residential sector on the back of urbanization and as industrial growth slows down. Expected natural gas demand for the power sector should also see significant growth, although, in absolute terms, the amount of gas in the generation of power will still represent only a fraction compared to that of coal.

The central aim of Chinese foreign policy continues to be the maintenance of a stable international system. China may be competing for energy resources with other countries, but this competition is unlikely to lead to direct confrontation. Similarly, energy security concerns have not led the PRC to drastically increase its defense expenditure. Economic factors triggered by China’s capitalist transition will continue to deepen the country’s energy-import dependence, thereby increasing the prominence of energy security in Chinese policy-making. The successful protection of energy security will, in turn, depend, in large part, on whether China can manage its geopolitical environment and avoid confrontation over energy resources. It will also hinge on whether China’s energy production and distribution system can be reformed to avoid ecological degradation and disaster.

5. The Belt and Road initiative and energy strategy

27 Source:IEAWorldEnergyOutlook2012.

Figure 3: Natural Gas Demand in Select Regions in the New Policies Scenario27

Chinese domestic production, however, is unlikely to keep up with this robust demand

growth, which has expanded by nearly 20% since 2010. China has imported about one-third every

year, and this is a trend that is unlikely to abate in the near term. While it was initially thought

that China’s vast domestic reserves of unconventional resources such as shale gas could fill the

gap between supply and demand, the role of shale is likely to disappoint in the medium term.

Urbanization, the centerpiece of China’s growth strategy through at least 2020, will

also support natural gas because urban residential demand has been a major driver of gas

consumption (e.g., Chinese households almost exclusively cook with gas stoves). Between 2005

and 2012, residential gas consumption ballooned by 260%, thereby outpacing the consumption

growth rate in the industry. This trend is likely to pick up for the residential sector on the back

of urbanization and as industrial growth slows down. Expected natural gas demand for the power

sector should also see significant growth, although, in absolute terms, the amount of gas in the

generation of power will still represent only a fraction compared to that of coal.

The central aim of Chinese foreign policy continues to be the maintenance of a stable

international system. China may be competing for energy resources with other countries, but

this competition is unlikely to lead to direct confrontation. Similarly, energy security concerns

have not led the PRC to drastically increase its defense expenditure. Economic factors triggered

by China’s capitalist transition will continue to deepen the country’s energy-import dependence,

thereby increasing the prominence of energy security in Chinese policy-making. The successful

protection of energy security will, in turn, depend, in large part, on whether China can manage

its geopolitical environment and avoid confrontation over energy resources. It will also hinge on

whether China’s energy production and distribution system can be reformed to avoid ecological

degradation and disaster.

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5. The Belt and Road initiative and energy strategy

When Chinese President Xi Jinping visited Central Asia and Southeast Asia in the autumn

of 2013, he proposed a Silk Road Economic Belt and a 21st century Maritime Silk Road. Since

then, the so-called “One Belt, One Road” initiative has been a controversial issue. At a summit of

the Asia Pacific Economic Cooperation forum in November 2014, President Xi demonstrated his

strong will to promote the initiative.

Of the Belt and Road initiative, the Eurasian Corridor or Land Bridge portion will cover

the enhancement of infrastructure, including expressways, railways, pipelines, and optical fiber

cables. The Silk Road Economic Belt plan is a grand strategic initiative that seeks to develop

a new trade and transportation route linking China with Central Asia and Europe. There are

various candidates for the route. The three basic candidates are given in the map.

11

When Chinese President Xi Jinping visited Central Asia and Southeast Asia in the autumn of 2013, he proposed a Silk Road Economic Belt and a 21st century Maritime Silk Road. Since then, the so-called “One Belt, One Road” initiative has been a controversial issue. At a summit of the Asia Pacific Economic Cooperation forum in November 2014, President Xi demonstrated his strong will to promote the initiative.

Of the Belt and Road initiative, the Eurasian Corridor or Land Bridge portion will cover the enhancement of infrastructure, including expressways, railways, pipelines, and optical fiber cables. The Silk Road Economic Belt plan is a grand strategic initiative that seeks to develop a new trade and transportation route linking China with Central Asia and Europe. There are various candidates for the route. The three basic candidates are given in the map.

Figure 4: Eurasian Corridor (Eurasian Land Bridge) candidate routes28

The Chinese government believes that the “One Belt, One Road” initiative is of great significance to its energy security strategy. Energy security is vital to industrialization and economic development. The international situation indicates that the U.S. “return to Asia” strategy has increased the risk of blockade in relation to the Malacca Strait and the South China Sea, which are both key points for China on the energy transportation route. In preparation for such a blockade, China has apparently been attempting to promote the so-called “March West” strategy for developing ground transportation routes in response to the U.S. Asian strategy. The government consistently maintains a strategic recognition that security must have two components. The “One Belt, One Road” strategy has domestic and overseas components. The overseas component covers the diversification of import sources, import routes, and energy sources. East European countries that depend on Russia for 100% of their natural gas supply are fatally vulnerable to political supply disruptions. China may be moving strategically to avoid such vulnerability. In addition to a crude oil pipeline built between China and Kazakhstan, China completed three pipelines—A, B, and C—from Turkmenistan in Central Asia to China’s west-east natural gas pipeline via Uzbekistan and Kazakhstan in December 28 Source:Preparedformchangjiangtimes.com(http://www.changjiangtimes.com/2012/10/417312.html)

Figure 4: Eurasian Corridor (Eurasian Land Bridge) candidate routes28

The Chinese government believes that the “One Belt, One Road” initiative is of great

significance to its energy security strategy. Energy security is vital to industrialization and

economic development. The international situation indicates that the U.S. “return to Asia”

strategy has increased the risk of blockade in relation to the Malacca Strait and the South China

Sea, which are both key points for China on the energy transportation route. In preparation for

such a blockade, China has apparently been attempting to promote the so-called “March West”

strategy for developing ground transportation routes in response to the U.S. Asian strategy.

The government consistently maintains a strategic recognition that security must have two

components. The “One Belt, One Road” strategy has domestic and overseas components. The

overseas component covers the diversification of import sources, import routes, and energy

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sources. East European countries that depend on Russia for 100% of their natural gas supply are

fatally vulnerable to political supply disruptions. China may be moving strategically to avoid such

vulnerability.

In addition to a crude oil pipeline built between China and Kazakhstan, China completed

three pipelines—A, B, and C—from Turkmenistan in Central Asia to China’s west-east natural

gas pipeline via Uzbekistan and Kazakhstan in December 2009, October 2010, and May 2014,

respectively. Their designed annual supply capacity is 55 million cubic meters each. China started

the construction of the fourth or D natural gas pipeline in September 2014. When it is completed

in 2020, the four pipelines’ combined annual capacity will reach 85 billion cubic meters. China

also plans to construct a pipeline linking China to Iran via Pakistan and Afghanistan. If this

pipeline is completed, China’s stable energy supply capacity will increase dramatically.

The 21st-Century Maritime Silk Road is that part of the Belt and Road initiative that goes

over the sea. Historically, the maritime Silk Road refers to the ancient maritime trade and cultural

route between China and other parts of Asia, Europe, East Africa, and the Middle East. Xi’s

MSR is an initiative to restore the historical maritime prestige and influence that China once

wielded as a maritime power. It is the counterpart of the Silk Road Economic Belt initiative

that Xi announced in September 2013, which focuses on overland connectivity between China

and Central Asia into Europe. The Chinese refer to this pair of initiatives as “One Belt and One

Road.” At the Central Conference on Work Relating to Foreign Affairs in late November 2014,

Xi announced his foreign relations objectives, which included the agenda to “turn China’s

neighborhood areas into a community of common destiny ... and boost win- win cooperation and

connectivity with our neighbors.”29

In the context of this plan, these two parts of Silk Road initiatives aim to promote bilateral

and multilateral partnerships across Asia to consolidate China’s leadership status in the region

and are linked to China’s continued efforts at national rejuvenation as a comprehensive national

power.30 However, the National Development and Reform Commission is still drafting the exact

plans for the two initiatives.31 As a result, while the plan is focused on developing maritime

connectivity and infrastructure access across Asia, it remains a vague agenda that is thin on

details.

6. Energy Cooperation Between China and ASEAN in the 21st-Century Maritime Silk Road from Neo-Liberalism

6.1 Cooperation in Oil

China and ASEAN countries have traded oil and gas with each other for several decades.

Cooperation between China and ASEAN countries in the field of energy began in the early 1980s.

The period from the 1980s to the 1990s was a stable developmental stage. From the beginning of

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the 1990s, the two sides of the oil trade accelerated bilateral energy trade. We collected data and

found that, during the period 2001-2004, China’s oil imports from ASEAN countries increased

from $3.1billion to $6.5billion, while the amount of oil exports increased from $1.25billion to

$2.3billion.

In 2005, China imported 8 million tons of crude oil and 6 million tons of refined oil from

ASEAN countries, which took China’s import volume of crude oil and refined oil to 7.5% and

22%.32 Even today, some changes are taking place in the trade scale and structure, and the China-

ASEAN cooperation and trade in oil and natural gas continues to develop.

Table 2: China imports Crude Oil form ASEAN33

ASEAN Countries Volume (tons)Thailand 589010Vietnam 647080

Indonesia 684407Brunei 79021

Malaysia 602992Philippines 68039

In accordance with the data released by the Chinese national customs, in 2013 China

imported about 2.67 million tons of crude oil from ASEAN countries. Most of this crude oil

was imported from Indonesia and Vietnam, at about 680 thousand tons and 640 thousand tons,

respectively; in 2013, China’s total import of crude oil was about 2.8 tons, while the trading

volume with ASEAN countries took China’s total crude oil volume to about 1%. If we compare

this with the 2005 figures, the proportion of China’s crude oil imports from ASEAN countries

declined. In 2013, China also exported crude oil to Malaysia to the figure of about 19 thousand

tons.

6.2 Cooperation in Natural Gas

Compared with its crude oil imports, China’s natural gas imports from ASEAN countries

are much higher. ASEAN is one of the most important sources of natural gas for China. In 2006,

China National Offshore Oil Corporation (CNOOC) and the Malaysia national oil company

signed a natural gas trade agreement. According to the agreement, Malaysia will provide natural

gas supply to Shanghai LNG station for 25 years; from 2007, Indonesia annually provided 2.6

million tons of liquefied natural gas to the Fujian Province; furthermore, in 2013, China imported

35.3 million tons of natural gas from surrounding countries. Regarding the volume of natural gas,

Malaysia and Indonesia liquefied natural gas (LNG) account for 2.7 million and 2.4 million tons,

which is about 14% of the total volume.

In this process, the Strait of Malacca and the South China Sea are two of the most important

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sea-lanes for the global oil and natural gas trade. According to EIA’s calculations, in 1993, the

amount of crude oil that comes through the Malacca Strait represents 7 million barrels per

day, whereas in 2011, the volume was 15 million barrels per day, which was about one third of

the volume of global crude oil shipments. It represented almost one sixth of the world’s crude

oil trade. Today, about 1.4 million barrels of crude oil pass through the Strait of Malacca every

day, and these are processed in Singapore and Malaysia. The rest of the crude oil is transported

through the South China Sea as channel exports to China, Japan, Korea, and other countries.

The crude oil is processed in Singapore and Malaysia to be made into refined oil and is then

transported through the South China Sea and enters the Asian market.34

In 2011, about 1,700 cubic meters of natural gas or more than 50% of the world’s LNG

trade was transported through the South China Sea to meet the demand of different countries

for natural gas. About half of this was transported to Japan, and the rest was transported to

China, Taiwan, and other regions; about 75% of the LNG was from Qatar, Malaysia, Indonesia,

and Australia.35 With the economic development of Asia, the future will see more LNG passing

through the South China Sea channel to countries in need of natural gas. As energy channels,

Malacca and the South China Sea are thus particularly important for China and the ASEAN

countries. If the sea-lane was cut off, it would be a huge shock to the economy and society of

China and the ASEAN countries.

6.3 The Opportunities for China-ASEAN cooperation

There is no doubt that the building of the free trade area between China and the ASEAN

countries will promote and develop the regional economy and enhance cooperation in the

trade of oil and natural gas. In recent years, China and ASEAN’s bilateral economic trade has

been in good shape, with an annual average that has increased by more than 20% and the scale

of trade continuing to grow.36 In 2011, the bilateral investment stood at 94 billion dollars, with

China’s investment in the ASEAN countries increasing by 34%. With the deepening of economic

exchange, personnel exchange is also increasing and reach 150 million.37 In the current

economic situation, the economic development of the developed countries is generally beginning

to slow down, but the FTA built between China and the ASEAN countries is continuing to grow

and grow. In fact, the China-ASEAN free trade area is growing much faster than other areas in

the world. Thus, governments and enterprises attach great importance to opening up markets

and expanding cooperation. With the establishment of the China-ASEAN FTA, a greater stage is

provided for bilateral governments to cooperate in oil and natural gas trading, which benefits all

the countries involved.

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Table 3: The ASEAN countries’ oil reserves (unit: billion barrels)38

Nations 1993 2003 2012 2013 2013(Reserve and production ratio)

Brunei 1.3 1.0 1.1 1.1 22.3Indonesia 5.2 4.7 3.7 3.7 11.6Malaysia 5.0 4.8 3.7 3.7 15.3Thailand 0.2 0.5 0.4. 0.4 2.5Vietnam 0.6 3.0 4.4 4.4 34.5

Cambodia 0 - - - -Burma 0.05 0.05 0.05 0.05 0.05

Singapore 0 - - - -Laos 0 - - - -

Philippines 0.15 0.15 0.14 0.14 -

Table 4: The ASEAN countries’ oil production (unit: thousand barrels per day)39

Nations 2009 2010 2011 2012 2013Brunei 8.3 8.5 8.1 7.8 6.6

Indonesia 48.4 48.6 46.3 44.6 42.7Malaysia 32.2 32.0 28.9 30.3 29.6Thailand 14.6 14.8 15.2 16.4 16.6Vietnam 16.7 15.3 15.5 17.0 17.0

Cambodia 0.6 - - - -Burma 18.1 20.3 20.0 20.0 20.0

Singapore 0 - - - -Laos 0 - - - -

Philippines 24.4 32.9 26.6 20.0 21.0

Since the 1990s, the major oil-producing countries of ASEAN have not seen a dramatic

change in their oil storage: Vietnam’s has increased a little, while Indonesia, Malaysia, Brunei,

and Thailand’s are declining. The decline is most obvious in Indonesia, as the ASEAN’s largest

oil producer.

Table 5: The ASEAN countries’ oil consumption (unit: thousand barrels per day)40

Nations 2009 2010 2011 2012 2013Brunei 15.5 16.3 18.2 18.0 18.0

Indonesia 61.6 66.4 72.3 73.2 73.8Malaysia 29.2 29.3 31.1 30.7 31.2Thailand 44.2 44.3 46.6 49.6 50.4Vietnam 14.6 15.6 17.0 17.2 17.4

Cambodia 36.3 26.3 33.0 43.0 47.5Burma 26.5 26.7 27.0 27.4 28.1

Singapore 1169 1380 1238 1247 1292Laos 3.16 3.16 3.0 3.5 3.5

Philippines 295 309 316 302 299

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In the last 5 years, the oil consumption of the 10 ASEAN countries has maintained steady

growth. The main oil-importing countries are Thailand, Philippines, Burma, Singapore, and

Cambodia. Singapore is the most unique among the 10 ASEAN countries, because the territory is

smaller than the others and has fewer oil and gas resources; however, Singapore has the world’s

third largest oil-processing center with the capacity to process 120 barrels of crude oil per day.

The oil-processing industry holds 11% of its gross industrial output value. Meanwhile, Singapore

is outstanding in Southeast Asia: not only is it a center of financial trade and shipping, but it also

has a special position in the operation of energy systems. Because production and consumption

are slower than before, ASEAN countries have generally realized the importance of improving

the domestic production of oil and natural gas.

The natural gas industry looks more promising.41 Natural gas reserves in Indonesia and

Malaysia are plentiful and easy to exploit, while the scale of production is most abundant. With

the huge production of natural gas, it is easy for these countries to meet their domestic demand,

while in 2012, these two countries exported natural gas to the extent of 34.8 billion cubic meters

and 30.3 billion cubic meters. In the last five years, the trade pattern has been stable.

Table 6: Proven natural gas reserves of 10 ASEAN countries (unit: trillion cubic feet)42

Nations 1993 2003 2012 2013 2013(Reserve and production ratio)

Brunei 14.0 13.8 13.8 13.8 23.6Indonesia 64.0 93.0 141.0 108.0 41.6Malaysia 68.0 75.0 83.0 83.0 15.8Thailand 8.5 13.3 10.6 10.06 6.8Vietnam 0.6 6.8 24.7 24.7 24.7

Cambodia 0 - - - -Burma 9.8 10.0 10.0 10.0 21.6

Singapore 0 - - - -Laos 0 - - - -

Philippines 1.6 3.8 3.48 3.48 -

Table 7: Natural gas production in the 10 ASEAN countries (unit: 10 billion cubic feet)43

Nations 2009 2010 2011 2012 2013Brunei 334 349 417 439 426

Indonesia 2557 2841 2693 2559 2486Malaysia 2133 2171 2180 2180 2440Thailand 1090 1281 1306 1458 1476Vietnam 250 290 272 296 346

Cambodia 0 - - - -Burma 408 426 421 416 463

Singapore 0 - - - -Laos 0 - - - -

Philippines 111 103 102 99 115

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Table 8: The 10 ASEAN countries’ natural gas consumption (unit: 10 billion cubic feet)44

Nations 2009 2010 2011 2012 2013Brunei 88 105 107 107 110

Indonesia 1344 1397 1320 1329 1356Malaysia 1100 1144 1081 1103 1200Thailand 1383 1592 1645 1796 1854Vietnam 250 290 272 296 346

Cambodia 0 - - - -Burma 115 114 118 116 121

Singapore 285 295 310 331 370Laos 0 - - - -

Philippines 111 103 102 99 120

The economic structure of ASEAN countries is relatively simple and unitary, and its

economy has developed a high level of dependence on energy. For some of the countries, such as

Indonesia and Malaysia, oil and natural gas resources are relatively plentiful, whereas in Vietnam,

oil and natural gas production and exports account for the majority of the country’s developing

economy. For Thailand, Philippines, and Burma, the oil and natural gas is not as plentiful as in

Indonesia, Malaysia, and Vietnam, which means that energy has to be imported; otherwise, these

countries will have to develop their own industries to meet their demand for energy. On the other

hand, the development of a domestic oil and gas industry is the best way to boost the national

economy. Burma’s proven natural gas reserves are quite abundant, which makes the exporting of

natural gas a possibility and create potential for the national economy to grow rapidly. At present,

some problems exist related to exploiting oil and natural gas, which include a lack of funding,

complex geological conditions, and the overly high cost of mining. Thus, Burma is promoting

the pace of energy cooperation with foreign enterprises to exploit oil and natural gas. ASEAN

countries are trying their best to exploit energies to participate in the global economy.

From 2011, some countries experienced political unrest, such as in the Middle East and

North Africa, which has affected regional politics and the economy. At the same time, the rest of

the world was becoming increasingly globalized. A direct effect of the unrest in the Middle East

and in North Africa was the instability of oil and natural gas production, which led to fluctuations

in the international price of oil and even led to a breaking off of the energy supply-chain all over

the world. There was no doubt that the biggest risk of these events was experienced by China,

which had imported crude oil from the Middle East and North Africa for a very long time.45

In order to improve its national energy security, China has clearly attempted to strengthen its

development strategy of oil and natural gas cooperation with Russia, Central Asian countries,

ASEAN countries, and other neighboring countries. At present, the country imports oil from the

ASEAN countries, and although the proportion has declined, the volume of natural gas imports

has grown. The adjustment of the national energy strategy further increases the strategic

position of the ASEAN countries. It also promotes the multiplication of energy sources and the

maintenance of energy security.

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6.4 Cooperation Between China and ASEAN by Neo-Liberalism

Realists and neoliberals have dif ferent perspectives on what would have to change to

increase cooperation in a particular situation.46 These differences can be understood by applying

Robert Powell's distinction between preferences over strategies, or ways to reach goals, on the

one hand, and changes in preferences over goals or outcomes, on the other47. Neoliberals are

more optimistic than realists because they believe that changes in preferences over strategies

usually are sufficient to produce mutual benefit. Much of this change can come by more and

better information-information about the situation, information about what the other side has

done and why it has done it, and information about what the other side is likely to do in the

future48. States can cooperate by reducing transaction costs (the costs and risks associated with

reaching and carrying out agreements) and, in turn, the successful reduction of such costs

can facilitate cooperation. Institutions can play a large role here, and this helps explain why

institutionalized cooperation can continue even when the initially propitious conditions have

disappeared49. With what we had mentioned above, the cooperation between China and ASEAN is

benefit for each other. In this process, China has clearly attempted to strengthen its development

strategy of oil and natural gas cooperation, and adjusted the internal structure on energy to

solve the problems on air pollution, meanwhile, the economic structure of ASEAN countries

is relatively simple and unitary, and its economy has developed a high level of dependence on

energy. Because the cooperation is benefit for bilateral, it probably will last for a long period.

7. The Challenges for China-ASEAN cooperation

Even though we have discussed the benefits of China-ASEAN energy cooperation from the

viewpoint of neo-liberalism, the cooperation also faces some challenges:

(1) Mutual trust in politics

In terms of political exchange, mutual political trust is a prerequisite for China and the

ASEAN countries, and this issue is currently one of the biggest obstacles to China-ASEAN

energy cooperation.50 Oil and gas cooperation between China and ASEAN faces problems such as

territorial controversy among the ASEAN countries; not only is it difficult to adjust international

relations, security problems exist in the international community, and some of these problems

are attributable to history. ASEAN countries hold different opinions about China’s development;

some have said that China is a threat to ASEAN. These problems make it difficult for each

country to practice oil and gas cooperation in the future.

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(2) Internal contradictions among ASEAN countries

These contradictions in the ASEAN countries have lasted for a long time. As far as we

can conclude, they take mainly three forms: 1) historical grievances and territorial sovereignty

conflicts among ASEAN countries, which makes the relationships among ASEAN members

volatile. During the 1970s and 1980s, Vietnam had invaded Cambodia, and although the current

bilateral exchanges are frequent and vast. Disputes related to the sovereignty of islands have

also taken place between Malaysia and Indonesia, Singapore and Malaysia, and Indonesia and

Philippines, which reflects the difficultly of ASEAN cooperation as a whole. 2) It also a common

phenomenon for members of ASEAN to experience degrees of political unrest, and domestic

political parties can frequently be seen breaking out into partisan conflict. Burma has been

dominated by the military for a long time, which leads to obvious social contradictions. In

addition, terrorist incidents sometimes occur in the countries due to anti-government forces.

When these forces become strong, disasters ensue for the country’s citizens. In recent years, the

American war on terrorism has, to some extent, inflicted injuries on Islam and Muslims, not only

the people but also the traditional culture, which has led to rising national emotion in the ASEAN

countries. Because of the instability of the Political Bureau, foreign investment has been limited

and unstable. Thus, international economic activities and trade are often disturbed, which is

harmful to the region’s economic development and community and even to the formation of the

free trade area. 3) There are great differences among the ASEAN countries, especially in terms

of ethnicity and religion, and these can easily break out into cultural conflicts.

8. Conclusion

The construction and development of the Maritime Silk Road has extremely important

strategic significance for economic and cultural exchanges between China and the rest of the

world. Strengthening oil and gas cooperation between China and the ASEAN countries is an

important part of the construction and development of the Maritime Silk Road. Oil and gas

cooperation between China and ASEAN has a long history. At present, both sides share an

interest in the Strait of Malacca and the South China Sea oil and gas channels. The construction

of the China-ASEAN free trade area, the ASEAN countries’ oil and gas production decline, the

rise in consumption, and the Chinese government’s emphasis on oil and gas cooperation with

neighboring countries provide good opportunities for future of oil and gas cooperation on both

sides. In order to promote oil and gas cooperation between China and ASEAN, it is necessary to

take the following measures: maintaining close high-level exchanges between parties; expanding

government co-operation; strengthening the construction of the China-ASEAN Free Trade Area;

increasing oil and gas investment in ASEAN countries; and continuing to explore new ways and

mechanisms of oil and gas cooperation in the South China Sea. These represent an effective

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method for China to solve the urgent demand on energy.

However, these do not mean that the importance of the Strait of Malacca is decreasing. The

Strait of Malacca is a sea-lane of enormous strategic importance. Its critical role as a global trade

passageway is underscored by the fact that it facilitates a quarter of the world’s seaborne trade

and a third of its crude oil transportation. The Strait of Malacca provides a critical passage that

facilitates trade between the West and the East. It sits between the oil-producing regions of the

Arabian Gulf and the huge consumer markets of Europe and South Asia, including the world’s

most dynamic economies in the Far East, which includes China, the world’s most populous

nation and now its second largest economy. The Strait of Malacca has played an immense role

in shaping the history of the region and the world and will continue to command international

attention due to its strategic location and importance to global trade and the littoral states’ socio-

economic wellbeing and strategic interests.

Neoliberals are more optimistic on cooperation in this case than realists because they

believe that changes in preferences over strategies usually are sufficient to produce mutual

benefit. Much of this change can come by more and better information-information about the

situation, information about what the other side has done and why it has done it, and information

about what the other side is likely to do in the future. States can cooperate by reducing

transaction costs (the costs and risks associated with reaching and carrying out agreements)

and, in turn, the successful reduction of such costs can facilitate cooperation. Institutions can

play a large role here, and this helps explain why institutionalized cooperation can continue even

when the initially propitious conditions have disappeared.

The Strait of Malacca is one the largest business channels in the world. However, with

the artificial threats that exist, no nation can unilaterally control all the variables involved,

and every nation has a unique capacity and responsibility to help elaborate countermeasures

to solve the problem of energy security. The prime methods for solving the energy-security

problem include deepening energy innovation, heightening energy-use efficiency, attending

to the international energy stock, and building up a steady international oil supply condition.

These are the necessary activities that will safeguard energy security. East Asian countries,

especially the Northeast Asian countries, mainly import energy from the Middle East, however,

the transportation line is long and the situations are complex. For ensuring energy transportation

security is an important issue that these countries facing. Under the new situation of this region,

bilateral or multilateral regional cooperation have become an indispensable and important part

of ensuring national energy security and economic security. Every country should develop the

methods of transporting oil, strengthening its control over energy transport, and quickening the

oil reserve construction. All of these are important methods for ensuring oil security. Organizing

conferences among relative countries to enhance military defense and to protect countries’

overseas interests is also a necessary measure for ensuring nations’ energy safety, while a

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multiple energy structure is the ultimate solution to energy security. Finally, multilateral security

cooperation is necessary for the East Asian countries.

For China, the Strait of Malacca is an important energy and trade passageway and the only

way for the 21st-Century Maritime Silk Road to pass through Asia. Without the Strait of Malacca,

the initiative will be impossible. Moreover, China is cooperating with ASEAN countries on many

oil and natural gas projects. From another angle, this proves that the Strait of Malacca is non-

substitutable. However, China should pay more attention to the importance of the Strait, which

can be compared to the nation’s lifeblood of energy. The Malacca Dilemma still cannot be solved,

and to some extent, the Strait of Malacca has become more and more important for cooperative

energy security.

Notes

1 For the details, please the website of Asian International Infrastructure Bank (http://www.aiibank.org/html/aboutus/AIIB/).

2 Jean-Pierre Lehmann, The New Silk Road: A Visionary Dream For The 21st Century, 27 May, 2015.3 URL Located at: http://www.china.org.cn/world/2015-01/30/content_34697352.htm4 李克强访马来西亚百忙为何还要专程去马六甲 ,(http://military.china.com/critical3/27/20151124/

20811815_all.html), Nov.24, 20155 Robert Keohane &Nye, Power and Interdependence: World Politics in Transition, third edition, (Boston: Little-

Brown, 1989), p.46 Robert Axelrod, The Evolution of Cooperation. New York: Basic Books, 1984.7 李格琴 . 西方国际合作理论研究评述 [J]. 山东社会科学 ,2008.(7)8 Robert Keohane &Nye, Power and Interdependence: World Politics in Transition, third edition, (Boston: Little-

Brown, 1989), pp.68-709 Simon Sheldon W., Safety and Security in the Malacca Strait: The Limits of Collaboration. Rep. 24th ed.

Maritime Security in Southeast Asia: U.S., Japanese, Regional, and Industry Strategies. The National Bureau of Asian Research.

10 U.S. Energy Information Administration, International Energy Outlook 2013, July, 201311 International Hydrographic Organization. Rep. 3rd ed, Limits of Oceans and Seas.. Vol.28. Monaco, 1953. 12 Zhong Yu, The New energy Strategy of China: Comparison Between World Energy China Outlook 2013-

2014 and 2014-2015, 創地共望 ,5 号 ,2016 年13 OPEC Monthly Oil Market Report, May.12, 2015 p.10014 URL Located at: http://oil.in-en.com/html/oil-2364602.shtml15 U.S. Energy Information Administration, China’s Reliance on Shipping Crude Oil Through the Straits of

Malacca, May, 201116 The State Council Information Office of the People’s Republic of China, China’s Energy Policy 2012, Oct.24,

2012 (www.scio.gov.cn)17 王朝峰，《论新世纪中国能源安全与对策》，04/2006.18 Source: EIA (https://www.eia.gov/todayinenergy/detail.cfm?id=9751)19 Wong, Edward, “‘Airpocalypse’ Smog Hits Beijing at Dangerous Levels,” New York Times, January 16,

2014 http://sinosphere.blogs.ny mes.com/2014/01/16/airpocalypse-smog-hits-beijing-at- dangerous-levels/?_php=true&_type=blogs&_r=0.

20 World Development Report 2010, Development and Climate Change, The World Bank, Washington, DC. p.19221 Xinhua News Agency, “China’s new energy and renewable energy boom in recent years,” China Daily,

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October 3, 8 2009, http://www.chinadaily.com.cn/business/2009-10/03/content_8762482.htm; accessed July 11, 2011.

22 “China's new energy and renewable energy boom in recent years” China Daily, October 3, 2009. http://www.chinadaily.com.cn/business/2009-10/03/content_8762482.htm; accessed October, 2010)

23 Source: BP Statistical Review of World Energy 201024 Source: The data are compiled from different sources by the author. China, General Administration of

Customs (2005), IEA (2006), IEA (2001), FACTS Global Energy(2008), EIA(2010)Note: Atlantic Basin source (3%) in 2010 is from Brazil

25 Estimates for gas consumption vary. See, for example, China’s 12th FYP on energy and on natural gas, National Development and Reform Commission, (http://news.xinhuanet.com/ energy/2012-12/04/c_124041999_3.htm.)

26 See BP Energy Outlook 2030.27 Source: IEA World Energy Outlook 2012.28 Source: Prepared form changjiangtimes.com (http://www.changjiangtimes.com/2012/10/417312.html)29 “Xi Eyes More Enabling Int’l Environment for China’s Peaceful Development,” Xinhua, November 30,

2014. http://news.xinhuanet.com/english/china/2014-11/30/c_133822694.htm (accessed December 15, 2014).

30 For an explanation of the Chinese concept of a Comprehensive National Power, refer to Hu Angang and Men Honghua, “The Rising of Modern China: Comprehensive National Power and Grand Strategy.” Center for China Studies at Tsinghua University. First published in Chinese in Strategy & Management, No. 3, 2002. http://myweb.rollins.edu/tlairson/china/ chigrandstrategy.pdf (accessed December 15, 2014).

31 “China Drafting Plan for Silk Road Cooperation,” Xinhua, June 10, 2014. http://news. xinhuanet.com/english/china/2014-06/10/c_133397357.htm (accessed December 15, 2014).

32 Mohamed El Hedi Arouri, Sabri Boubaker, Duc Khuong Nguyen. Emerging markets and the global economy. New York: Academic Press,2014:150–163.

33 Source: Chinese national customs 201334 U.S. Energy Information Administration. World Oil Transit Chokepoints,2012.35 The South China Sea is an important world energy trade route (2013. 04.04) http://www.eia.gov/

todayinenergy/detail.cfm?id=10671.36 Jose L. ASEAN-China free trade area: a bane or boon for ASEAN countries?, The World Economy,

2005,28:191 – 210.37 任丛丛 . 浅谈中国 – 东盟自贸区建设的意义及对外贸企业的影响 [J]. 中国外资 ,2014(1):184

-186.38 Source: http://www.eia.gov/countries/index.cfm?topL=con.39 Ibid40 Ibid41 BP. Statistical Review of World Energy 2014[EB/OL].(2014-06-23). (http://www.hw.ac.uk/news /bp-

statistical-review-world-energy-2014-17329.htm)42 Source: http://www.eia.gov/countries/index.cfm?topL=con.43 Ibid44 Ibid45 Chen Shen. Asia-Pacific inclusive cooperation and China’s strategic choice. Fudan Journal of the Humanities

and Social Sciences,2014(9):20-32.46 A particularly insightful use of counterfactuals to explore changes that could have avoided a major war

is Paul W. Schroeder, "Embedded Counterfactuals and the Case for World War I as an 'Unavoidable' War,"in Richard Ned Lebow, Philip E. Tetlock, and Geoffrey Parker, eds., "Unmaking the West: Exploring Alternative Histories of Counterfactual Worlds," unpublished book manuscript, Ohio State University. I am concerned here with short-run changes that could reduce a current conflict, not with changes such as instituting a world government, making all states democratic, or using future DNA

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Yu Zhong

technology to alter human nature.47 Powell, "Anarchy in International Relations Theory," pp. 318-321.48 Thus reputation plays a central role in neoliberalism parallel to its role in deterrence theory. But

what little empirical research we have casts grave doubt on the standard deductive claims for how reputations form and operate. See Ted Hopf, Peripheral Visions: Deterrence Theory and American Foreign Policy in the Third World,1965-1990 (Ann Arbor: University of Michigan Press, 1994); and Jonathan Mercer, Reputation and International Politics (Ithaca, N.Y.: Cornell University Press, 1996). See also Robert Jervis, "Signaling and Perception," in Kristen Monroe, ed., "Political Psychology," unpublished book manuscript, University of California at Irvine.

49 Keohane, After Hegemony. See also Celeste A. Wallander, MortalFriends, Best Enemies: German- Russian Cooperation after the Cold War(Ithaca, N.Y.: Cornell University Press, 1998), pp. 19-34.

50 Li Jinming, Li Hongli. The current situation in the south China sea dispute and suggested responses, Contemporary International Relations,2013(10):63 – 68.

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